A paratrooper who died during a gunfight with the Taliban in Afghanistan was probably killed by friendly fire when he was "caught in the crossfire", an inquest was told yesterday.

Corporal Bryan Budd, 29, who was awarded the Victoria Cross for acts of "inspirational leadership and the greatest valour", was found lying in a stream after being shot in the abdomen. Fragments of a bullet of the type used by British troops were discovered in his body.

Recording a narrative verdict, Andrew Walker, Oxfordshire's assistant deputy coroner, told his widow: "On August 20 2006, Cpl Bryan Budd was on active service, leading his men through a maize field in Sangin [in southern Afghanistan's Helmand province] when they came under withering fire. Cpl Budd fell when caught in the crossfire. That soldiers like these are prepared to face bravely the constant threats to their lives with unhesitating courage is a credit to them, their unit and our armed forces."

Budd's widow, Lorena, a soldier in the Adjutant General's Corps, said the inquest had been a difficult experience. She said in a statement: "Bryan laid down his life in an act of supreme valour. By making the ultimate sacrifice, his conspicuous gallantry reflected the highest traditions of the Parachute Regiment."

Ed Wallace, a ballistics expert, told the court that tests on two bullet fragments had established that they were 5.56 calibre ammunition, which is issued to British troops. But tests of 24 weapons used by Budd's comrades had failed to establish if any of them had fired the fatal shot.

After hearing Wallace's evidence, the coroner told the hearing: "In summary, I can be satisfied on the balance of probability that this was a Nato 5.56 projectile fired from a Nato weapon." Wallace replied: "Yes, that's the most likely cause."

Budd's VC citation referred to two incidents in 2006. In July, after two of his comrades were hit, he "personally led the attack on the building where the enemy fire was heaviest, forcing the remaining fighters to flee across an open field, where they were successfully engaged".

A month later, Budd decided to attack a group of Taliban fighters. As his section moved forward they came under a "withering fire that incapacitated three of his men. Cpl Budd continued the assault on his own, knowing full well the likely consequences of doing so without the close support of his remaining men".

His widow, from Ripon in North Yorkshire, added: "Bryan was a loving husband and father to our two daughters, Imogen and Isabel. He will always be missed, but his memory continues to live on."

Budd's commanding officer, Lt Col Stuart Tootal, said: "The fighting in which Cpl Budd lost his life ... took place over extremely difficult ground, which included fields of high-standing crops of maize and involved direct engagement with the enemy, often at distances of only a few metres."